Is There an Emerging Democratic Agenda?

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CreditHarry Campbell

By Jared Bernstein

June 5, 2017

While Donald Trump and his Congressional majority continue to push a harsh, hard-right ideology, so far they’ve been a legislative failure. And for good reason: For years, all they did was oppose Barack Obama and the Democrats, without bothering to develop an actual governing agenda of their own. Democrats must not make the same mistake. Playing defense is necessary, but it is not sufficient.

In fact, under the surface tension, a robust, highly progressive agenda has been coming together in recent months, one with the potential to unite both the Hillary and Bernie wings of the party, to go beyond both Clintonomics and Obamanomics.

These ideas come from the left wing of the party, but I’ve noticed more and more centrist Democrats, along with establishment donors, who increasingly recognize the need, in both substantive economic and electoral terms, to get outside the old boxes and go bold.

One of the boldest ideas coming down the pike is a universal child allowance: a monthly stipend for all families with children. International data show that child poverty in America remains at 20 percent — twice the rate in Germany and seven times the rate in Denmark.

Those countries, and most other advanced economies, provide regular payments to families with children based on the recognition that investing in children is an essential public good. Yet here in the United States, though we have a patchwork of programs, the lowest-income children often get no income support, while children in wealthy families benefit from generous tax deductions.

A child allowance of $250 a month per child would cost about $190 billion a year, though half of those costs could be offset by consolidating existing, less-efficient policies. It would cut child poverty by 40 percent and deep child poverty by half, while providing middle-income families raising children with a baseline level of stable income.

Next, even as we close in on full employment, there are parts of America where job growth and labor force participation are well below the national average. Historically, public policy tries to help such left-behind areas through place-based tax credits, but their track record is dismal. If we want to help places with too little labor demand, we must implement direct job creation policies, meaning either jobs created by the government or publicly subsidized private employment.

Infrastructure build-outs can help, but what’s really needed is a permanent, scaled-up version of a subsidized jobs program that worked well in the last recession. The program helped create about 250,000 jobs, many of which were in the private sector, by subsidizing wages for a fixed time period. One careful study from Florida’s version of the program found that, relative to a control group, participants’ work and earnings went up not just during the program, but after it as well.

While direct job creation will help achieve the necessary job quantity, we also must boost job quality. A strong idea in that regard is an expansion of the earned-income tax credit into the working class. The tax credit is both broadly popular and very successful: In 2015, it lifted 6.5 million people, including 3.3 million children, out of poverty.

A recent analysis asked: What would it take for the earned-income tax credit to offset the damage done to low- and moderate-wage earners by the forces of inequality that have steered growth away from them in recent decades? The answer is a $1 trillion expansion in the wage subsidy over the next decade. A family of four making $40,000 would get a tax credit of about $6,000 instead of its current benefit of about $2,000.

Even in Washington, $1 trillion is real money, but I like the way one tax expert, Chuck Marr, put it: “For less than one-fifth of the cost of the Trump tax plan, we could improve the lives of millions of working-class people.”

Remarkably, the federal minimum wage is still $7.25, though most states and many localities have their own higher version of it. Still, 21 states remain on the federal level, and the “fight for $15” has been an important and successful movement by and on behalf of low-wage workers. One new estimate finds that 41 million workers would get a boost from this policy. More of them have college degrees than are teenagers. In other words, the devolution of low-wage work in America means that families often depend on a minimum-wage earner.

Some job displacement is possible given an ambitious increase like this, but a new proposal from congressional Democrats doesn’t get to $15 until 2024, giving employers time to adjust.

Though Democrats have written bills for most of these ideas, no one expects them to go anywhere in this Congress. What’s important is that such ideas, once the domain of the party’s left wing, now face a diminished resistance from centrists, who once viewed them as too expensive and too interventionist. The bold minimum wage increase has 152 supporters in the House and 31 in the Senate.

Progressives will be playing defense for many years to come. But let’s also make sure we’re ready to roll with a true progressive agenda when our time comes.

Jared Bernstein (@econjared)is a senior fellow at the Center on Budget and Policy Priorities.